MANAGEMENT

Detailed explanation-1: -In contrast to speculative risk, pure risk involves situations where the only outcome is loss. Generally, these sorts of risks are not voluntarily taken on and, instead, are often out of the control of the investor. Pure risk is most commonly used in the assessment of insurance needs.

Detailed explanation-2: -Chance of loss is closely related to the concept of risk. Chance of loss is defined as the probability that an event will occur. Like risk, probability has both objective and subjective aspects.

Detailed explanation-3: -Chance of Loss distinguished from Objective Risk◦Chance of Loss – Probability event that causes loss will occur. ◦Objective Risk – Relative variation of actual loss from expected loss. **The chance of loss may be identical for 2 groups but objective risk may be quite different.

Detailed explanation-4: -The asset may lose its value if a certain event happens. This chance of loss is called as risk. The cause of the risk event is known as peril.

Detailed explanation-5: -"Risk is the chance of loss.” Albert H. Mow-bray, Insurance (1st ed.; New York: McGraw-Hill Book Company, Inc., 1930), p.